Is this payment schedule weird?

A contractor we’re considering has proposed a payment schedule of 15% at the start of the job with the balance due when the work has been completed. It seems unusual, & I’m not sure what to make of it, if anything. ???

otaydzic

in General Discussion 2 years and 10 months ago

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cate | 2 years and 9 months ago

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Great! Good luck with the project and enjoy your new deck.

otaydzic | 2 years and 9 months ago

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Update – the 4th bid was the way to go. The first 3 estimates differed significantly, & the 4th came in slightly lower than the middle bid, which did confirm appropriate pricing. Contractor #4 also has a standard payment schedule. There have been no red flags at all. Taking the time to ask more questions & to await the last bid has delayed the start of the project but allowed the best choice to be made. Since signing recently with #4, he has communicated effectively with our engineer, pulled permits, & is ordering materials. Thanks to everyone on the forum who offered advice & feedback.

andriywww1990 | 2 years and 10 months ago

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I was thinking it was a direct pay from customer to steel vendor. I cannot see how this is possible otherwise.

cate | 2 years and 10 months ago

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OP, does this contractor normally do exactly this type of work? How will he send out the steel fabrication without a deposit for that? Also I would verify his license, check the Better Business Bureau, and call two references. If it all checks out, I’d be OK with the payout schedule as long as everything is specified in the contract, including the time frame, start and finish date, and that the balance will be paid on completion of the work.

andriywww1990 | 2 years and 10 months ago

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Because i have no knowledge of this kind of work, those numbers mean nothing to me. If no 4 comes in between 22 and 31, that might be your person. On a lot of commercial work, the low person is automatically cut. There is still too much spread between 22 and 31.

You might want to engage these folks in conversation a bit. See how conversant they are. Learn a few things from 31k and ask 22k some questions to see if he has answers.

I imagine this must be hard for homeowners. Us working in it, at least we have an idea of the language so we are always listening and noting things and we listen for differences in the others. Bring a contractor into a room with 5 building professionals and you realize who does a lot of something and who is trying to do something fast.

otaydzic | 2 years and 10 months ago

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The 3 proposals I’ve received are for $16K, $22K & $31K–hence my confusion. I will speak to the contractors again. And hope that proposal #4 will clarify appropriate pricing.

andriywww1990 | 2 years and 10 months ago

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After taking an initial pass at contractors with a round of questions, you will learn that one might approach things differently than the others. This could be the higher or lower priced person and it could be good or bad. After you see the differences, you can call them back and ask pointed questions and see how they respond. People who are less experienced will not be able to address some of the things or challenges that a more experienced person readily has answers for. Someone doing a lot of anything can explain this the same way you explain making a pot of coffee including potential problems and all the solutions.

andriywww1990 | 2 years and 10 months ago

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So, first, i know nothing about this kind of construction and have no idea of the cost of the materials nor labor for this. For someone to get into this kind of work, they have to have a fair bit of experience. But two things make me question this: the low deposit and non existant progress payments and the spread of the bids. They are too far apart. I would get a fourth bid. This is exactly the reason for a 4th bid. If the 4th bid comes in near the top one, that is where you need to be.

Also, call each of the people you have bids from and do not tell them anything but ask them to explain how they arrive at their price. Be conversational and take notes and listen to see if they have considered something others have not or have left something out.

When the 4th bid arrives, do the same thing. You will learn a lot by doing this.

What is the spread? What percent is between them?

otaydzic | 2 years and 10 months ago

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Interesting comments from Doors. The project is a steel & concrete deck & stairs, as per engineer’s construction drawings. As I understand it, steel fabrication will be subcontracted out, with construction/installation phase to take about a week. It’s been a challenge to find a GC who’s both able to pull the permit (required by co-op & already approved) & willing to consider the job. The proposals I’ve received have been quite divergent price-wise, with the high bid almost double the low bid. The contractor I’m considering falls in the middle, & my engineer has worked with him before – which gives me some confidence that they will see the job through. I’ve arranged for one last contractor to prepare a proposal before I make a decision. After that, I’ll be out of options. I would love to be able to accept the high bid since the contractor is personable, responsive, & has done work for 2 neighbors on my block, but the price difference is too great.

andriywww1990 | 2 years and 10 months ago

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Seems low. I am not sure what they are doing but when i start a job i want all of the matetials covered and then some. Or all of the immediate materials covered and labor forward. If it were a drawn out reno over 6 mos, i can understand not covering all of this and for that there are progress payments. I can see on a long job something like this: 25%, 25%, 25%, 25%. Or 33%, 33%, 33%..

on something small, maybe the contractor is only asking you to cover materials?

I cannot see how he is paying labor on this arrangement. By labor i also mean himself and the help. I suspect he is less experienced and does not have the confidence to ask for a more aggresive schedule (i get 50% up front; the guy who did my bathroom got 50% up front) This person might end up asking for more money before the job is even half way done if it takes more than a month. We have to eat and have insurance payments. If an expensive tool breaks, there could be a problem. If this contractor is putting materials on credit cards or not paying the balances in full every month, he is playing a fool’s game.

If this is something running more than a week, ask him to explain that 15%. If he us younger or less experienced and you think he deserves it, do him a favor and help him understand how this could go wrong. When i was first self employed, i had a custmor say “you are going to hurt yourself” as i quickly scribbled a change order in front of him. He told me to think about what i was doing and redo the numbers. I have never forgotten him or that incident. If he had a problem and had to call me for something, i would help him without expectation of getting a job out of it.

cate | 2 years and 10 months ago

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    ["delete_feed_item"]=>
    bool(true)
    ["edit_feed_items"]=>
    bool(true)
    ["edit_others_feed_items"]=>
    bool(true)
    ["publish_feed_items"]=>
    bool(true)
    ["read_private_feed_items"]=>
    bool(true)
    ["delete_feed_items"]=>
    bool(true)
    ["delete_private_feed_items"]=>
    bool(true)
    ["delete_published_feed_items"]=>
    bool(true)
    ["delete_others_feed_items"]=>
    bool(true)
    ["edit_private_feed_items"]=>
    bool(true)
    ["edit_published_feed_items"]=>
    bool(true)
    ["manage_feed_item_terms"]=>
    bool(true)
    ["edit_feed_item_terms"]=>
    bool(true)
    ["delete_feed_item_terms"]=>
    bool(true)
    ["assign_feed_item_terms"]=>
    bool(true)
    ["edit_feed_blacklist"]=>
    bool(true)
    ["read_feed_blacklist"]=>
    bool(true)
    ["delete_feed_blacklist"]=>
    bool(true)
    ["edit_feed_blacklists"]=>
    bool(true)
    ["edit_others_feed_blacklists"]=>
    bool(true)
    ["publish_feed_blacklists"]=>
    bool(true)
    ["read_private_feed_blacklists"]=>
    bool(true)
    ["delete_feed_blacklists"]=>
    bool(true)
    ["delete_private_feed_blacklists"]=>
    bool(true)
    ["delete_published_feed_blacklists"]=>
    bool(true)
    ["delete_others_feed_blacklists"]=>
    bool(true)
    ["edit_private_feed_blacklists"]=>
    bool(true)
    ["edit_published_feed_blacklists"]=>
    bool(true)
    ["manage_feed_blacklist_terms"]=>
    bool(true)
    ["edit_feed_blacklist_terms"]=>
    bool(true)
    ["delete_feed_blacklist_terms"]=>
    bool(true)
    ["assign_feed_blacklist_terms"]=>
    bool(true)
    ["edit_feed_template"]=>
    bool(true)
    ["read_feed_template"]=>
    bool(true)
    ["delete_feed_template"]=>
    bool(true)
    ["edit_feed_templates"]=>
    bool(true)
    ["edit_others_feed_templates"]=>
    bool(true)
    ["publish_feed_templates"]=>
    bool(true)
    ["read_private_feed_templates"]=>
    bool(true)
    ["delete_feed_templates"]=>
    bool(true)
    ["delete_private_feed_templates"]=>
    bool(true)
    ["delete_published_feed_templates"]=>
    bool(true)
    ["delete_others_feed_templates"]=>
    bool(true)
    ["edit_private_feed_templates"]=>
    bool(true)
    ["edit_published_feed_templates"]=>
    bool(true)
    ["manage_feed_template_terms"]=>
    bool(true)
    ["edit_feed_template_terms"]=>
    bool(true)
    ["delete_feed_template_terms"]=>
    bool(true)
    ["assign_feed_template_terms"]=>
    bool(true)
    ["edit_shortcoder"]=>
    bool(true)
    ["read_shortcoder"]=>
    bool(true)
    ["delete_shortcoder"]=>
    bool(true)
    ["edit_shortcoders"]=>
    bool(true)
    ["edit_others_shortcoders"]=>
    bool(true)
    ["publish_shortcoders"]=>
    bool(true)
    ["delete_shortcoders"]=>
    bool(true)
    ["delete_published_shortcoders"]=>
    bool(true)
    ["delete_others_shortcoders"]=>
    bool(true)
    ["edit_published_shortcoders"]=>
    bool(true)
    ["aioseo_manage_seo"]=>
    bool(true)
    ["aioseo_page_analysis"]=>
    bool(true)
    ["aioseo_page_general_settings"]=>
    bool(true)
    ["aioseo_page_advanced_settings"]=>
    bool(true)
    ["aioseo_page_schema_settings"]=>
    bool(true)
    ["aioseo_page_social_settings"]=>
    bool(true)
    ["rank_math_edit_htaccess"]=>
    bool(true)
    ["rank_math_titles"]=>
    bool(true)
    ["rank_math_general"]=>
    bool(true)
    ["rank_math_sitemap"]=>
    bool(true)
    ["rank_math_404_monitor"]=>
    bool(true)
    ["rank_math_link_builder"]=>
    bool(true)
    ["rank_math_redirections"]=>
    bool(true)
    ["rank_math_role_manager"]=>
    bool(true)
    ["rank_math_search_console"]=>
    bool(true)
    ["rank_math_site_analysis"]=>
    bool(true)
    ["rank_math_onpage_analysis"]=>
    bool(true)
    ["rank_math_onpage_general"]=>
    bool(true)
    ["rank_math_onpage_advanced"]=>
    bool(true)
    ["rank_math_onpage_snippet"]=>
    bool(true)
    ["rank_math_onpage_social"]=>
    bool(true)
    ["rank_math_admin_bar"]=>
    bool(true)
    ["rank_math_analytics"]=>
    bool(true)
    ["rank_math_content_ai"]=>
    bool(true)
    ["srm_manage_redirects"]=>
    bool(true)
    ["SPF Manage Analytics"]=>
    bool(false)
    ["administrator"]=>
    bool(true)
    ["editor"]=>
    bool(true)
  }
  ["filter"]=>
  NULL
  ["site_id":"WP_User":private]=>
  int(1)
}

What is the scope of work, how long will the work take, and is the time frame in the contract?